Trust fund for under 100k [finding a trustee]

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Laz81
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Joined: Tue Dec 13, 2016 6:00 am

Trust fund for under 100k [finding a trustee]

Post by Laz81 » Tue Dec 13, 2016 6:14 am

My ex has been ordered to create a "child support trust fund" using part of a workman comp settlement he received. The judge doesn't know anything about trust funds so I've taken it upon myself to research the best way to structure this and have it ready to propose at our next hearing.
It seems like putting these funds in a bank and having the bank be the trusteee and disbursing x amount per quarter or per year would be the lowest cost option. The problem is I can't find a bank who is willing to act as trustee on an amount so low, even though all they would need to do is disburse funds periodically per court order and not actively manage.
Any ideas?? I've looked everywhere for options!

GreenGrowTheDollars
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Re: Trust fund for under 100k [finding a trustee]

Post by GreenGrowTheDollars » Tue Dec 13, 2016 10:33 am

Might want to check with several local credit unions to see if they would handle something that small. Still, there would be fees and possibly tax filings.

Alternatively, could the funds be put in a Uniform Trust for Minors Account (UTMA) with a third party (say, a lawyer or the parent who is scheduled to receive the child support) as the trustee? This would be a much less expensive route.

Tal-
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Re: Trust fund for under 100k [finding a trustee]

Post by Tal- » Tue Dec 13, 2016 10:49 am

I'm talking out of my pay grade on this, but I think my read of a trust is a bit different than yours.

My take is that the trustee does more than just distribute funds. Specifically, they must manage the funds in a specific way (generally following an approximation of some standard portfolio/allocation), and make distribution decisions that go beyond automation (e.g. when child support ends, who gets the money, and how).

I feel like we need more info about the spirit of the trust. Is this to pay child support to you for a child that you and your ex have? Is the trust only for the benefit of a specific child/children? If so, what is the age(s) of the child(ren), and total amount paid per month?
Debt is to personal finance as a knife is to cooking.

Laz81
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Re: Trust fund for under 100k [finding a trustee]

Post by Laz81 » Tue Dec 13, 2016 11:20 am

The funds are to be used for the children's educational, medical and extracurricular expenses. They are currently 1 and 2 years of age.

bsteiner
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Re: Trust fund for under 100k [finding a trustee]

Post by bsteiner » Tue Dec 13, 2016 12:17 pm

I don't know of any banks or trust companies that will take a $100,000 trust.

You might consider a trusted friend or family member, or two (one from each side).

Tal-
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Re: Trust fund for under 100k [finding a trustee]

Post by Tal- » Tue Dec 13, 2016 12:46 pm

Laz81 wrote:The funds are to be used for the children's educational, medical and extracurricular expenses. They are currently 1 and 2 years of age.
This is helpful.

Here's what I'd propose:

At 100K, finding a paid third-party to act as the trustee is not a good idea. This is in part due to expenses, and in part due to simplicity.

For now, I think you need to get your head wrapped around, and propose a detailed structure of what the trust will, and will not pay for. Will it pay for daycare? Private school? Soccer shoes? Spanish class? Studying abroad? etc. Will a parent be compensated for insurance premiums if the child is on their insurance plan? Etc. These are not easy questions, and probably require some time with an attorney to set it up.

I encourage you to get very specific in the trust document so that managing the trust is as unambiguous as possible.

Once the trust is set up, I would suggest you, or someone you know, act as the trustee. At this point, the trust should specify what will, and will not be paid for by the trust. In the event that the trustee pays, or doesn't pay in a manner consistent with the trust, your ex can sue on behalf of the kids. This means that if you use the trust to fund a trip to Vegas, your ex can sue you, on behalf of the kids.

If you wanted to propose something at the upcoming trail, I'd start by you writing some detailed points of how the money would be spent in a simple word document, and share it with several stakeholders (your ex, any involved grand parents, etc.). This will not be legally binding, but will get some feedback prior to including an attorney (if this is all part of a divorce, the above steps may not be a good idea). Once you have your head wrapped around some general ideas of how the trust should work (i.e. what will, and will not be paid for out of the trust), I think you should work with an attorney to have a fully fleshed out trust document ready to present. This will cost you some money (a grand?) and would likely be red lined, but that's probably a good starting point.
Debt is to personal finance as a knife is to cooking.

Laz81
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Re: Trust fund for under 100k [finding a trustee]

Post by Laz81 » Tue Dec 13, 2016 12:50 pm

Naming a neutral friend or myself trustee, would not eliminate the fees of a trust though correct?

Laz81
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Re: Trust fund for under 100k [finding a trustee]

Post by Laz81 » Tue Dec 13, 2016 12:59 pm

This my plan:

Allocate $1,200 per kid per year for extracurriculars
Allocate 6k per kid for braces on their 8th birthday
The remaining amount to be divided equally per month until they reach the age of 18.
This is to be used for medical and school only.
Whatever is not used at the end of the month goes into 529 accounts. Or goes back to ex.

Laz81
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Re: Trust fund for under 100k [finding a trustee]

Post by Laz81 » Tue Dec 13, 2016 1:02 pm

Has anyone used kiss trust? They only charge $25 per disbursement, so if the court order is set up to disburse x amount per year, it would only be $400 total in fees.

DeliciousDuck
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Re: Trust fund for under 100k [finding a trustee]

Post by DeliciousDuck » Thu Dec 15, 2016 12:08 am

Laz81 wrote:Naming a neutral friend or myself trustee, would not eliminate the fees of a trust though correct?
You might consider adding info on kids ages, your plan, and additional questions to the OP, you might get more responses that way.

I'm mostly bumping this thread, see if you can get more responses.

However, I can tell you for our trust, there is a fee for the trustee built in to the trust. If you yourself were trustee, I think you could waive that fee.

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